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August 12, 2019

How to Protect Your Children from Identity Fraud

Freezing your children's credit at the credit bureaus can help safeguard them from child identify fraud

If, like me, you’re a parent of young children, you know the routines and priorities: feed, bathe, vaccinate, read to, save for college, and choose your toddler battles wisely. But, no matter how young or old your children may be, there’s one important task you should not neglect: freeze their credit.

Now, rather than combing through public death records to capture SSNs, criminals are targeting those of the youngest Americans. In part, this is due to a change made in 2011 by the U.S. Social Security Administration in the way it generates SSNs. While previously the formatting of SSNs allowed validation of the SSN’s “age” as a sanity check to legitimate inquiries, the new process, called randomization, allows fraudsters to exploit dormant SSNs, e.g., those of children born after the change took effect.

Identity thieves take a child’s SSN and use it alongside a fictitious name, address, phone, and birthday to apply for credit and open accounts – essentially creating a fabricated or compilated identity known as a synthetic ID. Randomization also makes it harder for financial institutions to verify legitimacy, as the first five digits are no longer indicative of the holder’s birthplace, as was the case in the former SSN numbering convention. It’s the basis of a scheme that is pristine, according to Jason Kratovil, executive director of the Consumer First Coalition, because:

“Since this is a child’s SSN paired with made-up information (although only the criminal knows this), no file can be provided to the bank, likely leading to a declined application. However, as is the process by which many consumers become credit-active, this inquiry triggers the creation of a file at the credit reporting agency, but with the fraudulent information. Thus, a ‘synthetic’ identity is born.”

Children’s identities are a perfect target because a SSN is required by the IRS for parents to claim their newborns as dependents. While most Americans get their SSN at a very early age, there is no logical reason to check children’s credit scores, so any fraud perpetrated against these victims is typically undetected until they turn 18, leaving them with massive debt before they've even reached voting age.

Why Should Parents Care, and What Should They Do

Child identity fraud should be a concern for parents because when it occurs and goes undetected until your child reaches adulthood, he or she may be unable to get a loan, rent an apartment, or engage in other essential financial activities. Here’s what you can do now: